Deposit money for a house

[ToxicBunny]

Excuse my ignorance but what is logic behind a bank only giving a 90% loan? Does this mean that if you want a bond for a R1 million house they expect a 10% deposit from your side to make up the R1 million or is this along the lines of I need R1 million rand I will give bank R50k deposit and then they say they will only give R900k?

The logic is, that you will need to have R100k cash to give to the current owner as a "deposit" and the bank will finance the rest of the money through a bond/mortgage.

 

[SlinkyMike]

If you don't have the deposit then you are buying well beyond your means IMHO.

You should buy with some breathing room for the sake of your own investment.

What happens if that 2% hike in the repo rate happens? I'm guessing you'd be in a very tight situation.

Just something to consider.

 

[SauRoNZA]

Don't make debt to make more debt.

Rather just wait it out then.

Personal Loans are the devil.


Also if you can just barely afford the instalment at 30% of your salary, then you can't afford it. No matter what the bank says.

 

[Coasti]

I agree, this is the best approach. Try to use the same attorneys for bond attorneys that the seller uses as transfer attorneys, then sit around a table and work out a win-win agreement.
By using the same attorney, you can also negotiate discount on their fees, going rate of up to 25%.

Are you working through agent or directly with seller?

When I bought my house 2 years ago I managed to get the seller to inflate the price and confirm that I paid him a deposit. Was a bit risky but we got the lawyers to get the agreement in writing.

Basically the seller wanted R950k and I already knew that the banks were going to request a deposit and that I would need about R40k for fees. Signed an OTP for R1.1m starting that I already paid a deposit of R110k to the sellers lawyer directly, got my bond originator to apply for R990k bond. Seller got his R950k. Value of house today is about R1.5m.

It was risky for both the seller and myself but got the house I've always wanted. The banks actually lodged the bond at R1.1m but only paid out the R990k. I have the option to apply for the difference via an access facility without having to do a new bond application. Bank was standard bank.